i am long oil, full disclosure. but i think we'll see this resolution on washington and that will continue to put people into oil as growth picks up. >> it's been a great week, jeff. appreciate it very much. ty, have a great weekend. i'll see you monday. that does it for us on "power lunch." it will be another business week next week as we look ahead to the jobs report and more. "street signs" begins right now. breaking news on the fiscal cliff. the gop saying they will agree to more tax revenue if something else happens. we'll tell what you that is. where is john mcafee? the millionaire is still on the run in central america. le call in to the show this hour with how he has been surviving. it is an interview you will not want to miss. plus, are you overtaxed? maybe. but not by uncle sam. we'll tell you why. and why it may be the end of the road for detroit. one state senator's plan to

dissolve the city. he is your guest. happy friday, everybody. mandy will be back on monday. i'm brian sullivan. thank you very much for joining us. stocks relatively in a holding pattern again all ahead of the fiscal cliff. we're not seeing big moves. people unwilling to take bets. we're going to get to bob pisani in just a minute. but first we need to get to eamon javers with some breaking headlines from mitch mcconnell on the fiscal cliff. eamon? >> brian, we're getting a trial balloon here just within the past couple of minutes from mitch mcconnell. he's the senate republican leader responding now to the president's proposal of yesterday. mcconnell telling the "wall street journal" just within the past few minutes what he had's like to see are changes to ensitelement programs, he's floating the idea of means testing medicare and social security. that means that the rich would not be able to receive the same level of benefits that the poor would from those programs. that would save some money. he would also like to see some retirement age extension.

obviously both very controversial in democratic circles. but mcconnell saying that is the price that republicans are going to demand if they're going to talk about new tax revenue. now speaking of new tax revenue, we just saw president obama in pennsylvania at a campaign style rally touring a toy factory, and then making a speech. president obama saying that this is all about the republicans holding the country hostage on behalf of tax cuts for the rich. take a listen to the president earlier today. >> a lot's riding on this debate. this is too important to our economy, it's too important for our families to not get it done and it is not acceptable to me and i don't think it is acceptable to you for just a handful of republicans in congress to hold middle class tax cuts hostage simply because they don't want tax rates on upper income folks to go up. >> reporter: now just minutes after that, speaker of the house, john boehner, the republican leader here on the house side of the capitol, took to the podium as sort of a downbeat speaker boehner saying

that we are at an impasse here in washington in these negotiations. >> no, there's a stalemate. let's not kid ourselves. i'm not trying to make this more difficult. if you've watched me over the last three weeks, i've been very guarded in what i have to say because i don't want to make it harder for me or the president. >> reporter: so, brian, as you can tell, they're talking about a stalemate here in washington but the very fact that mcconnell is floating new ideas in the "wall street journal" just within the past couple of minutes is an indication that the negotiations are still going on here, although mcconnell in the interview with the journal says that there's nothing going on behind the scenes that's anymore developed than what we've seen publicly. if that's true, that's an indication that the paper is not flying as fast and furious behind the scenes as we maybe thought. >> does mcconnell have the backing of more members of the gop? is he out there by himself or does he have the full backing? >> no. he has the full backing but generally speaking, republican

members of the senate are seen by their republican house colleagues as a little squishy. the house guys are a little bit more willing to go to the hard line. in the senate these are people that represent entire states, not just small congressional districts so they have to be a little bit more broad minded so, therefore, they tend to push them ideologically toward the center. mcconnell does lead his caucus but republican senators generally would be a little bit more moderate than the republican house colleagues. >> isn't it funny, higher taxes, means testing perhaps? all the things that may disproportionately hit the blue states. voting for higher taxes and fewer benefits on yourself. >> absolutely. look, mcconnell made the point that among his caucus, a lot of his folks, his republican senators, represent states that the president didn't carry. so he's talking about the president going out to pennsylvania today to try to put pressure. he says, look, that might not work with our guys. he didn't carry our states. >> not going to hit us, do it,

fine. eamon, thank you. let's get an update on the markets with bob pisani. >> here's the question -- should you be encouraged or discouraged by all of this commentary in the last two hours? go with the markets, folks. look at this. so you heard what eamon was saying there. representative boehner says we're almost nowhere on the talks. this is where it happened right here. have you noticed that we've gone essentially in where? this is a very, very small trading range that we are in. this is not statistically significant. senator mcconnell says the white house offer was almost comical? that's like insulting commentary back and forth to each other. senator mcconnell said there's nothing better going on privately. nothing going on privately? and the market didn't really react. you could see this is discouraging to see all this mud slinging but i'd go with what the market is saying. so far they still believe that number one, a deal is going to happen sooner than later and that it will be substantive. i'd hold on here before anybody gets too concerned. on the week if you just look at the trading patterns here, you

can see the sector hurt the most on the worries about higher taxes, utilities has. the best week far and away. it's really bounced back now. other sectors are sort of on the mixed side. by and large, we're about even on the week. we'll see what they do at the close. >> bob, thank you. now for a story that we have been following for a number of weeks. john mcafee on the run in belize saying he is wanted by police in connection with a murder. he says he is innocent. he joined us by phone on november 16th. and he rejoins us now again from an undisclosed location. robert frank, our wealth reporter, and jeff pullman, the producer, secured the interview. >> john, are you with us? >> i'm with you,sir, yes. >> great. great. thanks so much. well, it's been about three weeks since that american was murdered in belize and about three weeks since you've been on the run. can you tell us now where are you and what has your life been like for these past three weeks? >> i am still in belize. my life has been sort of up and

down from a comfort standpoint. i move around frequently. currently my life has become a little more intense. the police raided my san pedro compound yesterday, made off with about half a million dollars worth of stuff. interestingly enough, they denied that they were ever there. however, i posted on my blog an audio recording of the caretaker who was there. it is a very moving recording. they threatened to torture him if he didn't tell him where i was. that's all online on the blog, whoismcafee.com. they terrorized my house, threatened to kill her if she said anything. we'll post more audio interviews today on the blog from people who in fact saw it. i had arranged -- i had a ten-minute warning before the raid began and i sent one of my boats up on coastal express filled with american tourists, all of who saw the raid. they were not anticipating that.

so clearly today they will have to admit that there was one. i don't know how they're going to characterize it but my life is becoming a bit more intense. >> john, i'll get to the raid in a minute. i did speak with the police and they did admit that they were there. but in the meantime, when we go to -- when you've been in hiding, have you had disguises? have you actually been in public? how have you been eating? what have you been sleeping on? tell us a little bit more about the details of your life these past three weeks. >> i have been in public many, many times. i went shopping in public the other day. went to buy some strawberries which are very rare, by the way, this time of year in belize. >> how did you look? how did you disguise yourself? or tell us some of the disguises you've used. >> i'd rather not because i'll be needing disguises fairly immediately, i have a feeling. i will say that i will be meeting personally with cnn in a

short amount of time. and i lfwill of course be needing one of my disguises. i'll be happy to demonstrate by putting them on for you later. >> are you considering leaving the country at this point? >> i am not. this is my home. >> john, brian sullivan. listen, your blog, which i am on, whoismcafee.com is pretty sophisticated looking but we also hear you're hiding out in the jungle. how do you create such a sophisticated looking website an blog while living underground in the woods? >> well, you know what? we have things in this modern age that are called battery powered laptops and telephones and it's amazing what you can do from the middle of nowhere if you have access to a cell tower. >> there is a lot of people out there, john, that arguably and understandably are having trouble believing some, or all, of this story. why should they? >> well, i mean i think your

co-anchor just said that they had called the police and the police finally admitted that, yes, they were there. if you look at the press release from last night, they said no, there was no raid on mcafee's residence. it was only my quick thinking -- not my quick thinking but maybe luck that allowed me to document the fact that they were in fact ransacking my property. i mean who are we going to believe? >> let me jump if here a minute. just for viewers, the police want you as a person of interest. you say you had nothing do with this murder but if you are interrogated or jailed, you're worried that they may actually kill you. can you tell us your alibi? can you tell us where you were on the night this american was murdered so at least we know your side of the story? >> well, i was home with amanda and i just found out there was actually another person on the property. i have a very large compound there. there were now nine witnesses to my whereabouts and they were all on my property. in fact, one of the witnesses is not exactly a friend of mine.

they were staying with a woman friend of mine. you know, unless all nine of these people are lying, one of which is not exactly a friend, and i had nothing to do with it. i barely knew the man. i'd spoken maybe 50 words to him in a five-year period. i admit, he was not my favorite person. he drank a lot and did he not like my dogs. they barked. quite frankly, the barking an annoyed me, too. >> you are mentioning you are getting increasingly desperate. after the raid the police confirmed to me they were at your compound. they are not categorizing that whether it was a raid or what context in which they came there. they also told me that this is a cold case at this point, meaning they don't have any new leads. why is your situation do you feel so desperate and what are some possible outcomes for you at this point? what will you do or what could you do? >> well, my situation is so desperate because this is

happened to me -- been happening to me constantly for going on seven months. first time was in april when 42 armed soldiers stormed my compound. arrested me, held me handcuffed for 14 hours with my hand behind my back, gave me no food or water, arrested me, then let me go with no charges. >> why do you think they did that? >> i do not play by the rules. i've donated millions of dollars to this economy, to the police departments, to homeless agencies, to -- everyone. but i don't do it by giving the money to the government and letting them dole it out because if i give $5 million to the government, $10,000 goes to the people, and 4 million-plus-change goes into the pockets of the politicians. i give directly to the people and i have been doing this all along. for example in orange walk i bought $300 boots for every single police officer because they didn't have any. and i gave it directly to the police department with the demand that i have an inventory of who they went to.

now how can you skim money from that? they don't have an opportunity to take. i do not donate to any political party. when i was asked to donate, i said get the f-- off my propert. excuse me. >> john, don't worry about it. we do apologize to our viewers about that. listen, it is live tv, it's cable and it has happened before. i see you donated $100,000 to the san pedro police department recently. at least you wrote that on your blog. how much money do you have left? >> not very much because i'm having difficulty getting some from my bank. oddly enough, i don't know why that might be. >> all right. >> my banks are in belize. everything i have is here in belize. everyone said it is a foolish move. >> are you armed? >> of course not. >> john mcafee, listen, thank you very much for joining us on cnbc. again, like we said before, be safe. your story is sort of captivated the nation and we'd like to see

your safe return regardless. john, thank you. >> thank you. >> all right. so again, folks, apologize for the language but little more than you probably hear on a "street signs" team meeting generally every day. >> things always get a little wild with john mcafee. >> yeah. listen. i don't know john mcafee. okay? i don't want to see anybody harmed. i didn't mean to be rude by asking him why should people believe his story. >> that's what everybody wants to know. >> when you look at the website, it is a very sophisticated blog that he's got. he purports to be on the run in the middle of the jungle or the coast. it's -- it can be difficult to believe. >> it's hard to believe either side. we get mixed stories from the police. one day they're saying we weren't at his compound. today they just told me they were but they're not going to characterize exactly why they were there. again, his story is changing. i just -- if his situation's getting desperate, i wonder whether he will leave the country at some point. it is a tiny country. eventually you'd think they would be able to find him if

they really wanted to. >> the area he's on is key. it's actually a very, very small area, even inside of small belize. >> that's right. that's right. >> and the stories -- there was reports that he had painted his face with shoe polish, stuffed cut-off tampons up his nose. he's a tall guy. right? the nation is not filled with necessarily tall individuals of mayan and aztec decent. >> they do have a lot of tourists there. >> not wearing tampons up their nose and their face painted with shoe polish. >> it is a little wild there but i bet you're right, there are not that many. but i just wonder if he may be getting ready to move or even leave the country. i don't know. but it sounded like he's prepared for something. i just don't know what that is. >> robert frank, thank you very much. a shout out to producer jeff pullman as well for getting that interview. i don't know how you find them, i don't want to know, but great job. so much more ahead, including why strategist jim paulson remains very bullish on stocks. he'll do ain't view without cursing. meet the michigan senator

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welcome back to "street signs." we're taking a look at all-scripts. falling on a reuters report down about 8%. remember, the company announcing it was evaluating strategic alternatives at the beginning of this month. reuters reporting its one suitor blackstone, they might be far

apart on that deal. unclear if they'll get a deal but the stock is one of the laggards. >> kayla, did you know strawberries were rare in belize in time of zbleer. >> i do now. there's a bull market somewhere. since the last trading day in november, here are your big winners by sector. we broke them down for you. consume discretionaries, abercrombie & fitch jumped 50% this month. industrials, pentair, up 15%. vuchlt lcan materials up 1.6%. consumer staples, despite all the concerns around the energy drink space, monster energy stock up almost 16% this month. in the transports, parent company of american airlines, and as a special bonus to our

friend herb greenberg, we note green mountain coffee roasters up 50.4% in november. despite the growing belief also by many that no deal will be struck when the clock strikes midnight on december 31st around the fiscal cliff, jim paulson remains unafraid. he's keeping his 1,500 target on the s&p 500. he is the chief investment strategist at wells capital management and he joins us now from a disclosed location. this is a curse-free interview, jim. i just want to point that out. why do you remain so optimistic on equities? >> all i can think of are curse words now, you got me focused on it, brian. that's dangerous. i think the biggest thing when i look to next year, people think we'll grow around 2%. i think we'll grow closer to 3%. that difference to me could be a huge catalyst for risk assets in general, particularly stocks next year. i know people are i think overly focused on fiscal contractionary

force. i bet most likely outcome is we get a little bit of fiscal tightening. it is more a fiscal mole hill next year than a fiscal cliff. but offsetting that is an economy which is firing on many more cylinders than it was a year ago. employment rate's coming down. bank lending rising, housing activity going up, confidence is down, debt burdens are down. in addition there is a lot of stimulus. money supply is growing rapidly. record low mortgage rates. we have the dollar down. we got gas prices falling at the pump for the holiday season. we've got inflation decelerating from where it was helping real incomes. i'm seeing a lot of evidence of china showing signs of new acceleration. we might get the emerging world doing better next year. we've certainly calmed down concerns about the eurozone. so i think there's a real case that we grow 3%, the emerging world picks up, and the valuation on equities rises -- >> even if we don't get a deal

in taxes? we hear that the average family will pay $1,200 more in taxes over the year and it is going to doom the economy. it's instant recession. >> well, there's no doubt if we have complete meltdown and gridlock in washington and we have a $600 billion-plus contraction hitting the economy next year, we'll probably have a recession. but i think the possibility of that is so remote. i think what's much more likely is we have a mild agreement on a mild tax hike and a mild spending cut and we extend most what's there already to live and fight for another day. i think this is the first of many fiscal cliffs to come, if you will, much like debt ceilings of the 1980s. i think most investors have already done what they need to do for the fiscal cliff. it is called diversification. beyond that, i think they should focus more on what's going to be left after the cliff -- >> where can you hide? where can you diversify away from the fiscal cliff in

minibonds? that's boring! >> well, i think you're sufficiently diversified. everyone should own a little bit of everything, stocks, bonds, commodities, overseas markets as well as domestic and real estate. and that's good enough. but i think if you do much more than that in anticipation of this, i think you're going to do yourself a disservice. i think it is better to focus on what we're going to return to very quickly after the end of this month or maybe a couple weeks into january and that's the fundamentals on the ground. they to me are looking better and better. >> you're a rich, successful guy. you're probably the mayor of minneapolis de facto. right? you got gold bars stashed in your garage out back, i'm sure. how are you -- >> i don't have strawberries from belize. >> how are you as an individual, you as jim paulsen preparing for the fiscal cliff? >> i've not donnie more than i always have. that is being diversified. i haven't done anything special

for this fiscal cliff. i don't see a need to do that. i think there is high, high probability we'll have a mild fiscal tightening as a result of this and we'll keep renegotiating on most of the fiscal issues that we face, brian. i think people are going to do a disservice. they'll take capital gains now and probably end up paying higher taxes as a result over the whole next five years. they ought to maintain the investment focus on what could happen over the next couple years, not in the next 30 days. >> jim paulsen, thanks for the "bleepin'" great interview, man. appreciate it. he kept it clean. next up, nearly 100 companies of major market caps out with a special dividend. it's not too late for you to get in on some of them. but is that alone a good reason to buy? and who in their right mind would spend more time in an airplane than is necessary? we'll show you why thousands of people are actually taking completely unnecessary flights. it's the frequent flyer cliff and it's taxiing ahead. stick around.

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are being treated for breathing problems. freight train was carrying vinyl chloride which is mostly used to make pvc and vinyl products. from trains to planes. with air travel, the pain in the rear that it is, why would anybody in their right mind fly more than they have to and fly to nowhere in some cases? well, it's happening. it's called the frequent flyer cliff. nbc's janet schamlian explains. >> reporter: a wild sky-high endurance race with fierce warriors crisscrossing the globe. >> i went to beijing for a day. >> reporter: their mission, miles. lots and lots of them. >> once you get started it is kind of like a bug. >> reporter: it's called a mileage run. trips where the journey, not the destination, is the sole objective. mile masochists. you might consider them crazy. after all, why would you ever spend more time in an airport or an airplane than you possibly had to? is this sport for you? >> it is a game.

>> reporter: gaming the system by finding cheap fares with long routes to accrue airline status levels, perks, and most importantly, frequent flyer miles for future freebies. >> to know me is to fly with me. >> reporter: think up in the air. >> the miles are the goal. >> reporter: brian cohen seeks out extreme itineraries. >> i went from atlanta to pittsburgh to watertown new york to pittsburgh to then santa ana, to san francisco to pittsburgh to santa ana for less than $75. >> reporter: how do you find fares like this? monitor these travel websites, set fare alerts and when you find a steal, buy it immediately because these fares may always go within minutes. this is not for the faint of heart but, mandy and brian, the reward are there. back to you. >> janet schamlian, thank you very much. i did not agree with that move, folks.

those seats are small. coming up, you are ultimate special dividend playbook. and we hop in the tax time machine. a front page story in the "new york times" says we are paying less in taxes than we did in 1980 but maybe it doesn't tell the whole story. we'll discuss it with the article's author coming up. if you think running a restaurant is hard, try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. ♪ ♪

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with mandy out, it is going to be a very fast "street talk." yum! brands down a percentage. sa same-store fourth quarter sales down in china. the company could deliver 10% eps growth overall. however at 19 times projected next year's earnings, ubs sees the stock as a little rich. conagra foods projected to improve long-term growth rates. they specifically mention frozen dough as part of the deal, saying it is on the store perimeter and that's a good thing. i have no idea what that means but i will trust jeffries. verisign.

having story here. it got approval from the u.s. government to serve as the operator of dotcom registries for six more years. however, they did not get the right to four price increases of up to 7% over the next six years and that stock move by the way wipes out all of this year's gains for ver. sign. zumiez missing revenue estimates, down nearly 30% year to date. blaming in part super storm sandy which does not explain the fact that zumiez also cut its forecast before the storm. back on october 31st. super value trading higher today. there is a possible deal maybe for the company. they say, listen, we're still engaged in strategic view alternatives. stock yesterday reports that a potential bid may fall apart. herb greenberg, rescue the segment here. before i get to super value -- >> you're tall. >> yes, i am. although i'm not a giant, as

someone noted. i want to go back to zumiez. the company i think we'll see a lot of. they blamed super storm sandy in part for sales, that may be true but they also cut their outlook back on october 31st. >> that goes back to blame the sandy. we know we'll see a lot more of that. super value is a great story. all you have to do is look at the sales decline of this company. you wonder what the buyers are really looking at here when they look at the debt, combined with the sales and earnings decline, it is so enormous, just go look at a chart of it and you'll wonder what these guys are seeing. >> i remember a number of years ago before i joined cnbc, i was at another network and i went po minneapolis and met with the then-ceo of super value right after they did this deal. because they were a distributor and a wholesaler. then they bought cub foods and they got more into the retail game, changed their game, spending a lot, borrowing a lot,

their debt rating was junk. he seemed very confident. he's gone now. >> i wonder how it lost its way in such a grand way. new until you see the numbers you don't realize how bad it is. >> do you think there's another lesson here because super value should be perceived as a "safe" company given that it is a staple, you have to buy food. people look at grocers as inherently defensive. >> didn't they once have a dividend? speaking of dividend, the fiscal cliff turning into a dividend boom. nearly 90 major companies -- there are more that are smaller -- now offering special dividend payouts ahead of the cliff. we are running a special dividend playbook just for you on this friday. what names are the touchdown trades, which names are more like the kansas city chiefs? let us bring in tommy belasis, ceo of john thomas financial. herb greenberg is here. i understand keith can't join us technically. tommy, it is all you and herb. what names do you like that are

worth buying because of the special dividend? >> i mean you got six times as many companies issue is these special dividends versus last year. two great companies -- costco and wynn. great growth stories. they have great trends. i think iron mountain is something but i'd stick with those two with the condition of this market. >> costco raised debt to do this special dividend. at what to interdoes that concern smu. >> i think it is more longer term than now. you got the effective bush tax cuts coming to an end this year. the top rate going to go up to 44%, including obama care. i think these two companies are going to offer great opportunities at these levels with their valuations to investors in a marketplace. >> what's very interesting, keith isn't with us but one thing i know he wanted to talk about was why he wasn't going to recommend buying guess even though they had a special dividend. that's a very interesting situation where a company's fundamentals may not be up to snuff. when does the special dividend get in the way or fool people into buying something they ought

not be buying? >> i'll tell you one thing. i think over the next 6 to 12 months investors are not going to be so keen to get involved in companies that have these dividend because they know what they're going to get taxed on. you're going to see a rotation going into muni bonds. in the short term i think it will be a benefit to investors to have these companies. over the longer term they'll have to rethink in terms of the companies that are issue is these special dividend. >> thank you, appreciate it. good point here. we sort of launched an impromptu contest on the air yesterday but it is a good point. how many more companies do you think -- you are not involved in the contest, you are uneligible to win as an employee -- will issue special dividend? >> probably a lot more. it is follow the leader. early guys get in. shareholders start calling them and say why aren't you doing this. >> does it bother you when they borrow to do it? >> it totally bothers me. three years from now rates are much higher, you might look back

and say, hey, it was a good way to get into debt. it was a good use of money, not a big deal. it always bothers me though if a company is starting to use debt to -- >> easy, mcafee. >> -- debt to juice something for shareholders in a way where you want to say, come on, either you got the cash or you don't. because if things don't work out, especially with buyouts -- >> i think you make a good point. a company that issues a regular dividend anyway, a special dividend, is just cherry on top. should we pay more attention to companies that are only going to issue a one-time dividend? in other words, they maybe are using it sort of to your point as a lure for investors. >> but again, what are the fundamentals? if they're doing it, it is sort of livg the old excuse story. what's the real reason here. if the company itself hasn't been doing well, be careful. that's why the numbers still matter. special dividend or no special

dividend, they're not all worth buying. you know that, i know that. >> i do know that now. herb greenberg, thank you very much. always educational. on deck -- the auto bailout was meant to save detroit. but is it time to let the motor city as an independent city go away? you're going to meet the michigan state senator who's proposing just that coming up. [ male announcer ] you are a business pro. monarch of marketing analysis. with the ability to improve roi through seo all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g.

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i'm bill griffeth. coming up on "the closing bell," at the top of the hour, senator majority leader mitch mcconnell found the president's proposal laughable. but we have someone with a real solution to the debt problem. could the parade of companies offering special dividend actually hurt those stocks in the long run? and former hewlett-packard ceo carly fiorina says hp's

board should point the finger at themselves for all the recent problems. coming up. maria and i will see you at the top of the hour from "closing bell" from here at the noeshew stock exchange. the chevy volt may not have a lot of owners but the ones it does have are very happy. once again, chevy volt has topped "consumer reports" annual owner satisfaction survey. 92% of volt's owners surveyed say they would definitely buy the car again. that puts the plug-in hybrid on the top of the most loved list for the second year in a row. the volt is being built at gm's massive hamtramic factory but that's not helping the city much. moody's downgrading $8 billion for the motor city. a michigan state senator has a bold plan to dissolve the city of detroit and rolling it into the county or the state.

michigan state senator rick jones joins us. he representing that state's 24th district just west of lansing. is this a real plan or are you making a point about the m miserable fiscal state of detroit? >> i'm making a point the governor or even the mayor fail to right the ship they're spending like there is no tomorrow. there is no control. the taxpayers i represent will not bail out detroit. as they teeter on bankruptcy, we have to look at all options. put all options on the table. one could be dissolving the city of detroit. >> is it true -- is it true that the city council -- in as much dire condition as the city is in -- was asked to meet and they said, sorry, we're on holiday break? >> absolutely. the mayor asked them to come in and look at the governor's plan and get ready to save the city.

"sorry, we're on holiday." it's ridiculous. it'sdysfunctional. if they don't save their own city, it may be time to look at dissolving it. >> what would that mean? would that mean that the city of detroit -- i thought it was already sort of being fiscally run by the state. what would that look like, dissolvation of detroit? >> you could actually dissolve a city -- >> in what? it is a very large geographical area. what would do you with it? >> well, perhaps a smaller city could spring out of it. something that was functional. they have massive amounts of land with nothing. so they've got to do something. you know they've lost 25% of their population in the last decade before the census. one person left every 22 minutes. >> what kind of reaction have you had to this plan? >> well, in detroit they're very angry. >> of course they are. we're saying we're going to take

your power, we're going to take your city. >> they want to keep control of their money, and that's understandable. but they have to be responsible. because if they go into federal bankruptcy, the vultures will come in and grab all the jewels of detroit. belle isle could be sold. perhaps cobol hall. i worry even the detroit institute of art. right now it is protected but in federal bankruptcy court, who knows. >> one thing that i've read that you have said, you believe your plan could be a better way to protecting some of the city jobs because some people might look at it and go, he's trying to kill the government jobs. that's not your goal. >> well, what would happen to the jobs if they went through federal bankruptcy? the employees would lose everything. the retirees would lose everything. and that's what they're facing. i don't think they realize the problems the city council is directing them into. >> state senator rick jones from

michigan, state senator, thank you very much for joining us on cnbc. interesting plan. maybe we'll have to get the governor or mayor on soon to talk about it. thank you. >> thank you. all right. trivia time. what is the number one selling album of all time? here's a hint. it turns 30 today. and then, could you be paying the same tax rate as max headroom and alf? remember them? we'll explain why coming up next. across the united states. the only time i've ever had a break is when i was on maternity leave. i have retired from doing this one thing that i loved. now, i'm going to be able to have the time to explore something different. it's like another chapter. wooohooo....hahaahahaha!

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the answer to our question, the best selling album of all time, yeah, "tlhriller." and it's 30 years old today. doing all the moves. it's the best selling album in history. spent 72 weeks atop the billboard, the most for any. it was the first album to spit out seven top-ten hits.

1982, wow. hard to believe. does that make you pine for the early '80s? the hair, the clothes, maybe the tax rates. a front page story in "the new york times" says, quote, tax burden lower for most americans than in the 1980s. let's talk more about it. all right. i like the story because we've been hitting on the same thing for about two years about tax rates on the federal level going down. but i did think that an important part of your story was around the middle where it said, yeah, federal tax rates have gone down, but state and local tax rates have gone up about as much to negate any gain to the lower and middle income households. >> that's one of the great points. by the way, great transition. you've hit one of the most important points, which is that

federal taxes are down for everyone, but a lot of people aren't seeing the savings because state and local taxes have come up. that's particularly true at the lower end of the spectrum. >> why do you think that? with so much attention on the buffett rule or the president's tax plan and the bickering over federal income taxes, that we haven't paid more attention to property, state, local, and sales taxes? >> one big reason is this data doesn't exist. we created a model so that we could simulate the way that this tax burden is distributed. there's go government entity that looks at the burden of taxation. there is no centralized data. so people really miss this point. they don't appreciate the extent to which state and local taxes are interacting with federal taxes and really consuming the savings that people otherwise might be getting. it's just a new way of looking at it. >> and there's something that i guess is being called housers

law where the idea being no matter where tax rates are, tax revenues as a percentage of gdp are going to remain constant or relatively constant over time. have you been getting pushed back to your story about that concept conce concept? >> well, it's important to understand that's true. whether or not it's a law is another question. it's absolutely true that they've remained pretty stable. the point here is the distribution has changed. relatively speaking, a lot less of that money is coming from the top end of the spectrum. conversely, at the bottom end, those people are paying -- they haven't seen anything like those cuts. so it's fine to say there's been a relative stability, but you don't want that surface sameness to cover up a really important shift underneath it, which is the distribution, the way the wealth is shared across the

population, is pretty dramatic. >> but what can we do about it? the point you made is a good one. the federal government has tried to help. they've cut tax rates for everybody. let's say that helped there. that's supposed to it add more money to your pocket. but then the states, the towns, the property taxes, they've all come and just taken it right back. >> yeah, so if you think this is a problem, and not everyone does, but if you think the tax burden ought to be distributed more progressively, then probably the most important thing here is the decline of the federal income tax as a source of revenue. it's not just a question of rising state and local taxes. it's the fact that the federal payroll tax now brings in almost as much money as the federal income tax. people say, hey, that's social security, it's its own thing. it's not. it's the same government. they've chosen to raise revenues with a flat tax rather than an income tax. >> so would you support a bumper sticker that says "blame your governor, not your president"?

>> i'm not here to run campaigns. i'm just here to put out the information. people who are concerned about it ought to be thinking about the state and local level. a lot of the trend is happening there. >> it was a thought-provoking article. thank you very much for joining us. on the issue of those proposed tax hikes, one freshman republican is taking a big back pedal on signing grover norquist's tax pledge. see, when representative chris gibson took over in 2010 as a candidate t his new york congressional district was the 20th. he signed it. but now through redistricting, he represents the 19th district instead. he's saying his signature on that doesn't hold water because he changed districts. turns out grover norquist is not buying that. a line in the pledge states, it's made to the american people to avoid that loophole. let them fight. all right. next up, a little inspiration for the new powerball winners. we have a novel way to spend some of that mega jackpot. radin, i'm totally focused. tdd#: 1-800-345-2550

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